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We audited PK Management, LLC, based on (1) media coverage of problems associated with Essex Village, an apartment complex in Virginia that it managed, and (2) issues identified in our prior audit of PK Management in Birmingham, AL.  Our audit objective was to determine whether PK Management assisted eligible tenants and maintained documentation to support the housing assistance payments it received for residents of the properties it managed in the Philadelphia region.

PK Management did not always maintain documentation to show that it assisted eligible tenants and supported the housing assistance payments it received for residents in accordance with U.S. Department of Housing and Urban Development (HUD) requirements.  Specifically, it did not maintain eligibility documentation in 23 of the 60 tenant files reviewed.  In addition, PK Management did not always maintain other required documentation to support compliance in 27 of the 60 tenant files.  These conditions occurred because PK Management did not have adequate controls to ensure that it maintained documentation to show that tenants were eligible for assistance and that housing assistance payments were supported.  As a result, HUD had no assurance that housing assistance payments totaling $497,762, which it made on behalf of the residents at properties managed by PK Management, were correct and accurate.

We recommend that HUD require PK Management to (1) provide documentation to support housing assistance payments it received totaling $497,762 or reimburse HUD from nonproject funds for any amount that it cannot support and (2) implement controls to ensure that it maintains documentation in the tenant files to show that tenants were eligible for assistance and that the housing assistance payments were supported.